Time ScoMo put himself ahead of the gas cartel

Via The Australian comes the good news:

Scott Morrison will move to ­ensure the Senate sits without a break until the Coalition’s entire $158 billion income tax cut package is passed when parliament resume­s next week, after Labor’s frontbench yesterday rejected calls from its own senior MPs to wave through all three stages of the plan.

Setting up a showdown with business and members of his own caucus, Anthony Albanese ­yesterday demanded the government split the tax legislation, fast-track the delivery of relief for middle-income earners and ­accelerate infrastructure spending, in a move he conceded would cost the budget an extra $3.7bn.

In his first major policy ­decision as Opposition Leader, Mr Albanese revealed that his frontbench had agreed to withhold support for the third stage of the tax plan, under which 94 per cent of taxpayers would pay a marginal rate of no more than 30 per cent by July 2024.

An the AFR:

A deal with the Senate crossbench to pass the $158 billion in tax cuts is looking increasingly likely after Labor effectively ruled itself out of the debate with a complicated compromise offer that was rejected immediately by the government.

…It is understood independent Tasmanian Senator, Jacqui Lambie, who has formed a loose bloc with Centre Alliance, could also support the tax cuts if satisfied with the energy price guarantees. This would deliver the tax cuts and sideline One Nation.

The Government has succeeded in wedging itself here. It’s obvious that it should agree to CA terms on gas reservation. Not only will it deliver the tax cuts it needs, it will deliver a much larger economic stimulus in the form of falling utility bills over time. Given the gas price determines the east coast electricity price, we are talking a $7bn one off boost from tax cuts versus $15-20bn every year in cheaper energy. It will also wipe out inflation, driving the RBA to QE sooner rather than later, also better for the Government.

Why is the Government so against it? Because falling energy prices will destroy the enormous lie upon which its entire energy policy platform is based: that renewable energy is responsible for higher energy bills. Without this lie, its coal fetish, and the QLD votes that come with it, dissipate.

But, truth be told, who even cares? QLD voters will still back the Coalition on the bigger issue of lower immigration. And if energy prices fall, the Government will get the kudos for it anyway in a stronger than otherwise economy. The issues are so poorly understood that it could even claim success for its ill-directed “big stick” powers aimed at electricity firms.  Nobody but MB readers would be the wiser.

Bizarrely, CA and I are actually arguing against the Government to boost itself.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Comments

  1. Update on Mascot Towers, it appears to be sinking as per articles a couple hours ago. and from news.com residents were apparently made to sign a waiver that they would not take photos when going in.

  2. HnH you ought to know by now when it comes to ScoMo and making smart policy decision there’s a simple truth: you can’t cure stupid

  3. Car Advice readers know that gas is expensive due to a lack of gas reservation!

    Tin • 6 hours ago
    Natural gas is too expensive here. We make it cheap for export and prohibitively expensive for ourselves – the dumb country.

    John John • 4 hours ago
    Oh please. Fracking bans? Australia is currently the world’s largest exporter of natural gas. Thanks to the possibly corrupt/possibly incompetent actions of our dumb politicians, we don’t reserve enough gas to meet domestic demands without paying a very high price. Consumers of Aussie natural gas in Japan pay less for our gas than we do.

    Cameron • 2 hours ago
    Australians own that gas, but the leases that we give them to extract it don’t protect the local market as the priority. Australia is one of the dumbest countries in the world, it is so resource rich but yet so poorly run that it’s got little to show for it.

    https://www.caradvice.com.au/769036/2021-volkswagen-golf-spied-naked/#comment-4515019788

  4. Listen here Cochise we aint going the reservation period. Bad medicine for big gas supporter tribes. We proud tribe–not go reservation period. Big bank they go bankrupt who gives a fuck, big gov go bankrupt who gives a fuck, house price always good, stop your shit. Pissing into the wind on this one HnH . Deplorable is the kindest comment that I can make on this act of treason. Few are aware and even less care.